Wed, Oct 1, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Stratton St and Universal launch UCITS Renminbi Bond Fund

Monday, September 30, 2013
Opalesque Industry Update - Universal-Investment and London based fund manager Stratton Street are launching the Stratton Street UCITS Renminbi Bond Fund UI (ISIN LU0850782243). This new UCITS fund follows the strategy of the long-term successful Renminbi Bond Fund managed since 2007 by Stratton Street, a pioneer in the renminbi sector. The original strategy was set up before the offshore CNH or “dim sum” bond market, and has not yet invested in those bonds as they are illiquid and expensive. Instead at present the fund invests in high quality investment grade Asian bonds and uses currency hedges to gain renminbi exposure.

The original fund has had positive returns every year since launch, and a total return of 87% in its first five years (US dollar A class to end December 2012). This fund is one of the best performing fixed income funds over this period globally and is highly awarded. The new fund is a UCITS vehicle allowing more investors to buy into this successful strategy. Stratton Street has a different approach to most fixed income fund managers. Andrew Seaman, fund manager for the Stratton Street UCITS Renminbi Bond Fund UI says “index based bond funds buy more from the most indebted. We buy from creditors, who can sustain their debts and pay us back.” This investment process has driven the company to focus largely on investing in the high growth creditor nations of Asia, including China. These countries have enough overseas assets to pay back their foreign debts and they are borrowing to invest in their long term growth. Over the long term these net foreign asset positions are associated with currency appreciation, which is why Stratton Street is positive about the long term appreciation prospects for the renminbi. The fund allows investors to benefit from the expected renminbi appreciation and the anticipated opening of China’s capital market.

Stratton Street’s base assumption is that the currency will double in value over the next decade. The fund is relatively low volatility, as the renminbi is a fairly stable currency. Investors can reduce the currency volatility by investing in the different share classes for the euro, sterling and Swiss franc class, leaving only exposure to the appreciation of the renminbi against the dollar. A dollar class is also available, as well as a CNH (offshore renminbi) class for investors who wish to use the fund to get a 2 of 2 higher yield than renminbi deposits. With the bonds held being investment grade, and in many cases government or quasi government the credit risk is relatively low. The fund is suitable for investors who want to take a long term view on the performance of Asia and the Chinese currency while holding good quality assets that provide a steady income.

Stratton St Capital has been profiled in Asia Pacific Intelligence.

Press release

bc

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   

Banner

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Legal - Court throws out lawsuits related to Fannie Mae, Freddie Mac profits, Insider case by SEC is a step removed from Herbalife itself, SEC grants Citigroup waivers, easing hedge-fund curbs[more]

    Court throws out lawsuits related to Fannie Mae, Freddie Mac profits From WSJ.com: A group of Wall Street investors on Tuesday suffered a blow in their attempts to sue the federal government over their treatment of the shareholders of mortgage finance giants Fannie Mae and Freddie Mac af

  2. CalPERS’ move might alter hedge fund fees for good[more]

    Benedicte Gravrand, Opalesque Geneva: When CalPERS, the California Public Employees’ Retirement System, announced on September 15th that it was unwinding its hedge-fund portfolio, it was seen by many as is a significant blow to the sector’s appeal. The Fund is

  3. Opalesque Exclusive: Institutions eye private credit over traditional fixed income[more]

    Bailey McCann, Opalesque New York: Investing in private insurance, realty tax receivables, or investment-grade short-term accounts receivable may not spring to mind as a means of mitigating risk in a portfolio, but one firm, New York-based BroadRiver Asset Management is out to change all that. Th

  4. Short-term trading quant fund beats S&P since '09[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: A relatively new multi-strategy, market-neutral quantitative hedge fund has managed to outperform the S&P500 and the HFRX Global since 2009. New Jersey-ba

  5. Unconstrained bond funds: Where hedge fund strategies meet mutual funds[more]

    From CNBC.com: For all the talk and buzz around indexes, or passive investing, the next big thing for bond mutual fund investors may be strategies that are the exact opposite. The rapid growth of "unconstrained bond funds" has been thrust into investor spotlight given last Friday's stunning news tha